Democrats Double Down on Dumb Ideas for the Economy

I’m betting the target voters are not as dumb as the Democrats think they are.

By Jay Richards Published on July 26, 2017

After the painful rout Democrats suffered in 2016, they’ve chosen a new strategy: Double down on dumb economics.

As an electoral ploy, it’s not as crazy as it sounds. Populism is in vogue. Remember Bernie Sanders? He gave Hillary Clinton a run for her money in the primaries. He pushed far left policies, embraced his socialist label, and electrified the Millennial base.

And then there’s Donald Trump. He won both the GOP Primary and the general election while fighting free trade and pushing protectionism. Hillary Clinton toyed with these ideas too, but she seemed to many voters to lack … sincerity.

The result? Donald Trump drew in just enough blue-collar voters in rust belt states that had gone for Barack Obama in previous elections. Hillary lost. Trump won.

A Better Deal

The Democrats claim they’ve learned their lesson. So, henceforth, they will appeal to voters’ economic ignorance! On Monday, they rolled out their newest effort. Economist Stephanie Kelton, a Bernie Sanders campaign adviser, had a hand in it. “I think it was significant that they reached out to me,” she said in an interview with The Atlantic. “They wanted to hear from that side, from someone who had been working closely with Senator Sanders.”

In Washington, the Dems are out of power. So, this plan is not so much policy as posturing. Signaling, not substance. And they’re still in audience-testing phase. An earlier version of their new slogan was leaked last week — “Better Jobs, Better Skills, Better Wages.” They wanted to chat up new “job-training opportunities.”

Skills? Job-training? Does anyone believe that the Democrats know how to train out-of-work machinists and office clerks? Maybe Patti Murray and Chuck Schumer could offer webinars on how to develop smartphone apps? Nah. The slogan got Twitter-swarmed. Which is just what it deserved.

So, the Democrats tweaked it: “A Better Deal: Better Jobs, Better Wages, Better Future.”

They replaced the implausible “skills” with the unverifiable “future.”

Where Jobs Come From

In any case, it’s just a slogan. The Democrats plan to dribble the policy details out over the next few weeks. On Monday, for instance, we learned that they have a plan to create jobs for 10 million Americans.

So, a clever voter might ask, where do new jobs and wages come from? Largely from new start-ups in the private sector. Which is also where most new jobs are destroyed. That’s because most start-ups fail. For long-term job growth, then, we need lots of new start ups, some of which grow into larger businesses, since that’s where most of the more stable jobs end up.

Democrats think the way to boost jobs and wages is to go after successful American companies who are trying to stay competitive in a global market.

Alas, the number of new startups has gone down in the last few decades. From 1992 to 1996 there was a net increase of 421,000 new businesses, and 405,000 from 2002-2006. In contrast, 2009, 2010, and 2011 “saw a net loss of new companies year-over-year — the first time in a generation.” Only in 2016 was there an uptick.

A big reason for the decline? Massive regulations in the Obama years.

These regulations also hit mid-size companies. In the past, many such companies sought the cash to expand in initial public offerings (IPOs). Now more and more of them seek to be bought out by a larger firm. Fewer start ups, fewer IPOs, more mergers and acquisitions: This is how the private sector responded to the regulatory monster well-fed during the Obama years.

What the Democrats Plan to Do Instead

So, do the Democrats plan to create space for new startups and IPOs? Nope. Instead, they plan to take on corporate mergers, such as Amazon’s recent purchase of Whole Foods. (They’re calling these “monopolies,” which they’re not.)

Note the Democratic impulse. They think the way to boost jobs and wages is … to go after successful American companies who are trying to stay competitive in a global market.

Expect Democrats led by Elizabeth Warren also to complain about the giant banks. The problem? It was Democratic policies like the 2010 Dodd-Frank Act — pushed by a Democratic Congress and signed by President Obama — that helped secure too-big-to-fail banks and harm small community banks.

For Democrats, this is the same old same old: Attack the private sector, call for more regulations. And when the private sector responds, attack and regulate some more.

Do the Democrats really think this is how to create new jobs? Who knows? They don’t have to believe it. They’re just hoping enough voters will believe it.

Call it Democratic Rule #1 of electoral politics: You can win an election by promising bad policies, as long as the policies sound good to voters.

I’m betting the target voters are not as dumb as the Democrats think they are.

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